Nette v Howarth

53 CLR 55

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(Decision by: Rich J)

Between: Nette
And: Howarth

Court:

Judges:
Rich JStarke J
Dixon J
Evatt J
McTiernan J

Subject References:
BANKRUPTCY
Superannuation fund
Contributions by bankrupt
Refund in lump sum
Capital receipt
Property divisible amongst creditors
Protection by State statute

Legislative References:
Superannuation Act 1916 (NSW) No 28 - ss 38, 88
Bankruptcy Act 1924 (Cth) No 37 - s 4; s 6; sub-s 60(1); sub-s 91(1); s 101

Hearing date: 29 March 1935, 1 April 1935
Judgment date: 30 April 1935

Melbourne (heard in Sydney)

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Decision by:
Rich J

The bankrupt whose estate was sequestrated on 10th July 1934 was in the public service of New South Wales. During the term of his service he made the required contributions to the State Provident Fund under s. 4 of the Superannuation Act 1916. Upon his resignation from the service on 28th August 1934 there was payable to him under s. 38 (1) of the Act a lump sum equal to the contributions paid by him to the fund. The official receiver of the bankrupt's estate requested the State Superannuation Board to pay this sum to him in his capacity as trustee of the bankrupt's estate. Upon the Board's suggestion the trustee applied to the Bankruptcy Court for an order for payment of the sum in question to him for distribution in accordance with the provisions of the Bankruptcy Act.

The learned Judge of the Bankruptcy Court dismissed the application, being of opinion that the money fell within the relative words "pay" etc used in s. 101 of the Bankruptcy Act and in its proviso. Unless excluded by other provisions of the Act, this sum is property which vests in the official receiver, and is divisible amongst the creditors of the bankrupt in accordance with the provisions of the Act, ss. 4 ("property"), 60, sub-s. 1 and 91 (i). It was contended on behalf of the bankrupt that the sum in question is protected by the proviso to s. 101 of the Bankruptcy Act. That section reads:

"Subject to this Act, where a bankrupt is in receipt of pay, pension, salary, emoluments, profits, wages, earnings, or income, the trustee shall receive for distribution amongst the creditors so much thereof as the Court, on the application of the trustee, directs: Provided that this section shall not apply to any pay, pension, salary, or wages which by any Act or State Act is made exempt from attachment or incapable of being assigned or charged."

Before interpreting these words it is necessary to consider the character of the money in question. Its character is stamped on it by the Act. It is a lump sum which the Superannuation Board is bound by statute to pay. It is not a payment in respect of past or current services. It is not periodic. On the other hand the words in the proviso have a common characteristic-they are periodic. "Pay" is a word of general import (Upperton v Ridley, ^[F1] at p. 286). It is used with reference to certain classes of employment,such as soldiers, sailors and police (Goodwin v Sheffield Corporation). ^[F2] "Pension" is in the nature of deferred pay, and usually given upon retirement for past services. Salary and wages are recompense periodically paid in respect of work or labour in another man's business. "`Salary,' I think, must mean a definite payment for personal services arising under some contract, and (to borrow an expression of my brother Fry) computed by time" (In re Shine; Ex parte Shine). ^[F3] "Wages" may be classified under the same genus. The sum in question is not computed with reference to recurrent events. It is a statutory refund paid on the happening of a given event, and made up of the contributions paid by the officer under the Act. In my opinion, it does not fall within the words of the proviso. The words of the proviso do not cover as large an area as the principal part of the enactment contained in the section.

We have already held that the difference in the enumeration in the two parts of the proviso is intentional, and not merely due to a compendiousness of expression in the proviso (see Stuart-Robertson v Lloyd). ^[F4]

The additional words contained in the main provision are "emoluments," "profits," "earnings" and "income." If the sum payable out of the Provident Fund to the bankrupt on his retirement fell within the meaning of any of these expressions, it would be within the discretion of the Court to say how much should be received by the Official Receiver as trustee of his estate. The whole sum would not pass ipso jure as property.

But, in my opinion, it cannot be brought within any of those expressions. They all relate to receipts of a revenue or income nature. "Emoluments" are the advantages in money or money's-worth which flow from occupation of an office or the like. "Earnings" are the rewards of exertion. "Profits" arise from the conduct of a business or undertaking of some kind or from commercial transactions. "Income" is a wide word, but it is incapable of including any receipt of a capital nature.

The lump sum, however, is a payment made once for all. It discharges the retiring officer's claim upon the fund. Its nearest analogy is the refund of premiums, or the cancellation of a life or endowment policy, or the payment of its surrender value.

I think the decision of His Honour Judge Lukin was wrong, and that the appeal should be allowed.